Deutsche Telekom Capital Markets Day (3): highlights Germany

General:

• "We believe highspeed network quality will be key differentiator".
• Rev stabilisation in 2014.

LTE:

• Coverage to 85% by 2016 (from 38% now).
• Peak performance 75 Mb/s in 800, 150 Mb/s in 1800 band.
• Capex 1800 70% lower than HSPA (in terms of capex per Mb/s)

Fiber (FTTC):

• Speed FTTC max 50/10 Mb/s, with vectoring 100/40 Mb/s
• Capex FTTC + vectoring 70% lower than FTTH (in terms of capex per home).

Hybrid access (FTTC with vectoring and LTE in 1800 band):

• Down: FTTC + LTE 200 Mb/s (100 each), ADSL + LTE 116 Mb/s (16 + 100).
• Up: FTTC + LTE 90 Mb/s (40 + 50), ADSL + LTE 51 Mb/s (1 + 50).
• Vectoring and hybrid prolong copper lifecycle up to 10 years.

Mobile targets 2015:

• Smartphone LTE sales 67% share (now 4%).
• 10m contract subs (+47%) (now 6.8m).
• Service rev EUR 7bn (+ 2-3%), market share 35%.

Fixed:

• Focus on wholesale to secure network utilization.
• Targets 2015:
• 2.7m fiber subs (+240%), market share 43%
• 3.0m Entertain subs (+60%)
• Connected home rev EUR 5.4bn (+2%).
• Growth initiatives (cloud, intelligent networks, De-Mail, M2M) rev EUR 0.7bn.
• Total growing rev EUR 9.2bn (+1.7%)
• Total rev EUR 22.2bn (from 22.7 in 2012), o/w >40% from growth.

                              2012  2013  2014  2015

REVENUE TEL DLD               22.7              22.2

          BASIC               15.2              13.0

          GROWTH               7.5               9.2

            CONNECTED HOME     5.3               5.4

            MOBILE DATA        2.0               3.0

            INITIATIVES        0.2               0.7

OPEX                          13.9              13.8

  DIRECT COST                  4.8               5.1

  INDIRECT COST                9.1               8.7

EBITDA MARGIN                   40    40    40    40

CAPEX   TEL DLD                3.6   3.4   4.1   4.3

          BASIC                                  3.2

          FTTC                                   1.1